Sales of homes built under development lease arrangements commenced before 27 January 2011 will not pay GST, according to the Australian government. Residential development lease arrangements are used by government to partner with the private sector to supply housing on publicly owned land.

On 27 January 2011, the Federal Government announced new rules that applied GST to the sale price of all homes built under development lease arrangements over the past 11 years.

However, Assistant Treasurer Bill Shorten today announced that the Federal Government’s rules will not be retrospective and will apply to sales of homes under development lease arrangements that were contracted after 27 January 2011.

The Property Council, which immediately raised concerns about the retrospective application of the proposed rules, welcomed today’s announcement.

“The Federal Government has listened to our industry’s concerns and scrapped retrospective rules that would have unfairly punished developers operating in good faith,” said Property Council Chief Executive, Peter Verwer.

“The announcement balances the Government’s need to clarify GST rules for sales of homes built under development lease arrangements and industry’s need for certainty and equity,” he said.